The ST Guide To... buying a car

SINGAPORE - Christopher Tan has been reviewing cars since the 1980s, having driven over 1,000 cars of all shapes and sizes. He has seen the good, the bad and the ugly – and that does not necessarily apply to the cars themselves. Motor companies can also be categorised the same way.

Here is his guide to help you pick a cream puff instead of a lemon, and to have a sweet buying experience instead of a bitter one.

1. Reputation

Whether you are buying a new car or a used one, choose established companies – businesses which have been around for decades. These tend to have a reputation they want to preserve.

Most of the publicly-listed groups offer new and used cars. Privately-owned multi-franchise agencies are also fairly safe. Among used car dealerships, it is safer to pick those which have CaseTrust accreditation. If in doubt, do a check on a company through the Accounting and Corporate Regulatory Authority. Or Google the company to see what people are saying about it.

2. Go direct

Buying a used car from an owner is cool too, as you do away with the middleman and the profit margin he makes. But this usually requires a bit more legwork. And you have to exercise caution as well – like having a simple sales agreement both of you sign, and witnessed by a third party. And make sure the person is actually the rightful owner of the vehicle.

3. Getting mechanical

Have the car inspected at assessment centres like Vicom, Automobile Association of Singapore and Star Automotive Centre will set you back by $200 to $300. But it could save you thousands in the long run. These centres should be able to ascertain whether a car has been in a serious accident or not.

ST FILE PHOTO

4. Hidden cost

The price you pay should not include extra charges. Some dealers levy dodgy charges such as “administrative fee” or “agreement fee”, which you should not foot.

Others may say you need to pay GST after you have settled on a car. GST should have already been included in the advertised price. Also, persuade the dealer to absorb or share the transfer fee.

5. Fine print

Read before signing anything. Unscrupulous agents might try backdating your loan. So you are already behind in payments before you drive off.

6. Cashback

Check deals with cashback incentives. They usually require you to pay back the incentive should you redeem your loan earlier than agreed. Find out what are the exact clauses for early loan redemption.

7. Carte blanc

Do not sign blank forms or blank cheques. Although it is convenient to leave everything to the dealer, this could cause you problems as a common practice in the trade is inflating the selling price to secure a fatter loan. If it is your signature on that document, you are condoning a false declaration.

8. Identity crisis

Never let a dealer keep your identity card or passport. It can be used for various transactions you are not aware of until it is too late. Of course, if you follow the previous advice, this should not be an issue.

9. COE conundrum

There are people who believe COE prices will defy gravity – despite premiums having fallen by more than $30,000 since 2013. They will continue to trend downwards. This means even though there may be occasional rebounds, the general direction is south. COEs will continue to trend downwards till 2018, when they will start to creep upwards. Again, this will be gradual.

10. Know your taxes

The price of a car consists of its open market value (OMV, or roughly its cost price) + Excise Duty + GST + Additional Registration Fee (ARF) + Registration Tax + COE + the dealer’s profit. ARF is 100 per cent for the first $20,000 of an OMV, 140 per cent for the next $30,000, and 180 per cent for the remaining amount above $50,000. GST is applied on a car after the Excise Duty is computed.

11. Carbon copy

If the car you are eyeing has a CO2 emission of up to 135g/km, it is entitled to a carbon rebate under the Carbon Emissions-based Vehicle Scheme (CEVS). The rebate ranges from $5,000 to $30,000, and is offset against the ARF. That means the scrap value of the car will also be lower. Cars emitting more than 185g/km attract a registration surcharge of between $5,000 and $30,000.

No, this surcharge does not bump up the car’s scrap value.

12. Profit motive

Knowing your car’s OMV, ARF and CEVS status will allow you to work out the dealer’s profit, and consequently, help you decide whether a car is “value for money”.

13. Body of evidence

Check out www.mta.org.sg for an online guide put together by the Motor Traders Association. The MTA can be reached on 6258-7210. The Singapore Vehicle Traders Association is a trade body for used car dealers. Its website is at www.svta.com.sg, and it can be reached on 6743-0269.

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